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ConAgra Foods To Buy Ralcorp

ConAgra Foods

Packaged food giant, ConAgra Foods, is buying St. Louis-based food producer Ralcorp for $4.95 billion.  The buyout will make ConAgra the top producer of store-branded foods in the U.S

ConAgra’s stable of brands include the likes of Chef Boyardee, Egg Beaters, and Reddiwhip, to name a few.  The deal creates a packaged food giant with $18 billion in annual sales

Erin Lash is Sr. Analyst at Morningstar.  She says Ralcorp has struggled recently in the face of increased manufacturing and distribution costs, as well overall tightening of the marketplace.

“And so there results have not lived up to expectations at this point,” notes Lash.  “Especially considering where they had hoped to be following the spinoff of Post earlier this year.”

ConAgra CEO Gary Rodkin will visit St. Louis later this week to meet with Ralcorp employees.   

In a video statement on ConAgra’s website Rodkin claims the purchase will give ConAgra a leg up in the growing market for “Private label” foods, otherwise known as “store brands.”

“Ralcorp is a leader in private-label food in the U.S. and this acquisition gives us a significant presence in growing categories,” said Rodkin.  “In fact, store brands have been growing faster than store brands for some time, and we expect that to continue.”

Ralcorp had twice rejected bids from ConAgra over the past year.

The purchase price of 90 dollars per share is 28 percent higher than Ralcorp’s closing stock price on Monday.

The deal is expected to close by March of next year and still needs Ralcorp shareholder approval.

Follow Adam Allington on Twitter:  @aallington

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